Last month’s five stock picks nearly doubled the return of the Standard & Poor’s 500 index in January. This month, U.S. News is back with five of the best stocks to buy for February.
An equally portioned portfolio of our January picks rose 10.5 percent last month, compared to the 5.8 percent rise of the S&P. Truthfully, that type of outperformance is tough to sustain, but as they say, nothing ventured, nothing earned.
[Read: Dividend Stocks vs. REITs: 7 Crucial Differences.]
Here’s a look at five of the best stocks to buy for February, and why.
Alibaba Group Holding Ltd (NYSE: BABA)
The Chinese e-commerce leader is an elite stock market pick, especially in this market. Also chosen as one of the seven best stocks to buy for 2018, there’s no reason BABA can’t follow up its impressive January outperformance (shares rose 18 percent) with another impressive showing in February.
There’s a simple way to think about why BABA stock is so attractive. Alibaba is sometimes referred to as the Amazon.com ( AMZN) of China. That analogy is actually a misnomer: Alibaba’s business is actually growing faster than Amazon’s was when it was the same size (in 2009). If you look at what AMZN shares have done since then, shares are up a cool 2,700 percent or so in the last nine years.
We’re not saying that can be expected with Alibaba stock, but you can certainly reasonably expect long-term outperformance.
Western Digital Corp (WDC)
While BABA is a good example of a high-growth company that doubles as a premium momentum play, WDC is a value play, and happens to be coming off a good earnings report as well.
For the holiday quarter, which the data storage company reported on Jan. 25, Western Digital announced that revenue rose 9 percent year-over-year, in-line with estimates. What the analysts weren’t expecting though was adjusted earnings per share of $3.95, which exceeded consensus EPS estimates for $3.79.
Trading at just 7 times forward earnings and about 8.5 times free cash flow, WDC is a nice value play and one of the five best stocks to buy for February.
UnitedHealth Group (UNH)
When Amazon, Berkshire Hathaway ( BRK.B, BRK.A) and JPMorgan ( JPM) announced they’d be teaming up to form a health care company unencumbered by profit motive for — to begin with at least — their 1 million employees and their families, UNH stock took a big hit, falling 4.4 percent in a single day.
Now investors have a rare chance to buy the leading health care insurer at a discount.
[See: 7 of the Best Bank Stocks to Buy for 2018.]
Many believe the tax cut law, which essentially repealed the individual mandate in the Affordable Care Act, will raise the costs of health care. And when that happens, you can be sure UnitedHealth and their swarm of calculating actuaries will charge you more than they’ll be shelling out for coverage.
Look at the long-term chart for UNH. Pullbacks are very rare, and as long as health care costs keep rising (as you know, there’s no end in sight), shares should keep rising. UnitedHealth isn’t just one of the best stocks to buy for February, it’s one of the more buy-and-hold opportunities out there, too.
Going for 22 times earnings, UNH is cheaper than the broader market, while also paying a modest 1.3 percent dividend.
SL Green Realty Corp (SLG)
SL Green is a real estate investment trust, and an interesting one at that: it’s the single largest office landlord in New York City. Like most REITs, it pays a solid dividend, which in this case is around 3.3 percent.
SLG is less established than some of the other best stocks to buy for February, but the $9.7 billion commercial real estate company is still nothing to scoff at. In the fourth quarter, funds from operations, more or less the REIT equivalent of EPS, advanced 11.9 percent year-over-year to $1.60 per share.
The company also repurchased a cool 4.9 million shares and increased its share buyback plan by $500 million to $1.5 billion.
Customers Bancorp Inc (CUBI)
Another one of the few names chosen as the best stocks to buy for 2018 makes February’s list as well: CUBI.
This small-cap bank stock, despite an impressive 19 percent rise in the month of January alone, is still an attractive pickup for almost any class of investor.
The conservatively managed regional bank trades for just 15 times earnings, is coming off an impressive quarterly beat, and plans to spin off its BankMobile division by the beginning of the third quarter. The spinoff should provide $3.57 per share to CUBI stock owners; on top of that, analysts expect the stock to earn $2.78 per share in 2018.
[See: 7 of the Best Tech Stocks to Buy for 2018.]
Multiply that $2.78 by a price-earnings ratio of 15 and add in the $3.57 per share spinoff and what do you get? $45.27, or about a 46 percent upside to its current price, which is around $31 a share currently.
More from U.S. News
7 of the Best Blue-Chip Stocks to Buy for 2018
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7 of the Best Health Care Stocks to Buy for 2018
5 of the Best Stocks to Buy for February originally appeared on usnews.com
